Bruce Caldwell wrote a long paper in the Journal of Economic Literature (March 1991) called 'Clarifying Popper'. He had three main aims. First, to introduce economists to those ideas of Popper that are most important for them. Second, to critically assess the relevant methodological literature on Popper. Thirdly, to offer an interpretation of Popper that clears up some problems in Popper's own work and in the literature about him.

The paper starts with an account of the non-existent Popperian theory of falsificationism, but it ends well, with the theory of metaphysical research programs and a revitalised version of Popper's situational analysis.

The section of the paper, sub-titled 'Popper on Demarcation and Falsification', is supposed to be a statement of Popper's position. There is a footnote reading "Popper does not like to use the word 'falsificationism' in referring to his views on the methodology of science (1983, xxxi). The term is frequently encountered in the critical literature, however, and its usage is standard among economic methodologists". It is important to correct the misleading "standard" usage, or at least to identify the assumptions that underpin it. Larry Boland did his best in that direction over more than two decades, the persistent misrepresentation of Popper's ideas has resulted in a lot of misplaced scholarly effort, especially under the influence of Lakatos, via Blaug and Latsis. Wade Hands recently demonstrated more insight into this situation but he attributed his revised perspective to a shift in Popper's position from falsificationism to critical rationalism. He should have admitted that he had come to a late realisation of something that Boland had been trying to communicate for a long time. In this paper, despite the aim of clarifying Popper, it is the non-existent falsificationist Popper who is set forth in the first section.

The obsession with demarcation

Part of the problem is the obsession with demarcating science from non-science. "In order to examine the growth of scientific knowledge, we must be able to distinguish science from non-science, we need a demarcation criterion...Popper shared the logical positivists concern with demarcation, but he did not accept the meaningful-meaningless dichotomy". This obsession is wrapped up with justificationism and the problem of induction (which is the result of justificationism in its empiricists' manifestation. It may be that essentialism is the result of justificationism in its rationalists' manifestation).

It may help to reformulate Popper's concerns, to get away from the obsession with meaning and justificationism, with verification, demarcation and the problem of inductive proof and probability. The most significant thing that concerned Popper was the way that evidence can be used to assist in the scientific enterprise. He was concerned with the growth of knowledge, the search for truth, and the description/understanding of the real world. Not all of this could be said out loud during the heyday of the Vienna Circle, for reasons that were described by Coffa in his rather strange book on the Circle (To the Vienna Station, an allusion to Edmund Wilson’s book on the Russian Revolution titled To the Finland Station, strange because Coffa tried to represent Popper as being on the wrong track while all the evidence indicated that the others had lost the plot. Coffa died without writing the concluding chapter of the book). Above all Popper was concerned with criticism, and attempted falsification represents the critical use of evidence, based on the logic of modus tollens.

Metaphysics revived

Popper officially rehabilitated metaphysics in his own work in the mid-1950s. In a paper ‘On the status of science and metaphysics’ published in Conjectures and Refutations he described how metaphysical theories can be critically discussed in terms of their problem-solving capacity and consistency. Since this time there has been no good reason to persist with the notion that he was a positivist and it also helps to take account of Bartley's explication of non-justificationism (1964, 1968, 1982, 1984) because this indicates the nature of his fundamental difference from the positivists and so indicates another reason to refrain from using the “falsificationist” label. So what label to use ? My favorite term is "non-authoritarian" (making the link with his politics) but fallibillism, conjectural knowledge and critical rationalism can all stand in, depending on the context. Incidentally, Caldwell’s paper is dedicated to the (then) recently deceased Bartley. More recently Caldwell has stepped into the late Bartley’s shoes by taking over the role of General Editor for the Hayek Project (following Bartley's friend, Stephen Kresge).

More on falsificationism

After describing some proponents of “falsificationism” in economics (fortunately not including Boland) he then proceeded to The Critique of Falsificationism in Economics. "It is only fair to alert the reader that I have been a frequent and persistent critic of falsificationism for nearly ten years". This was a part of a larger project, namely the critique of positivism, including logical positivism, logical empiricism, operationalism and falsificationism. This would have been a more original and challenging enterprise if positivism had not already been devastated by Popper, who replaced justificationism and inductivism with critical rationalism and the non-authoritarian theory of knowledge.

Beyond positivism

The second task of Caldwell's book Beyond Positivism was to identify the implications of the anti-positivist developments for economic methodology. The major implication was to settle for methodological pluralism, which on a charitable reading means to use of form of criticism (or the method) that is appropriate to the problem (or the theory) under examination. On a less charitable reading, pluralism collapses into relativism or instrumentalism. I am inclined to be charitable, at least for the more advanced Caldwell of the 1990s, if not the brash young Caldwell of 1982.

Caldwell noted the distraction that was introduced by Kuhn and Lakatos, and especially by Latsis, de Marchi and Blaug as they followed Lakatos. See this paper by Boland for a definitive statement on that and related issues.

Caldwell wrote "Though Popper admits that science contains metaphysical elements, he does not give them the prominent place accorded by Lakatos with his concept of the hard core". Strangely, by the end of this paper, Caldwell read the Metaphysical Epilogue to Popper's Postscript, so in a part of his brain he knew that Popper allowed a very prominent place to the elements of the metaphysical research program, thought unlike Lakatos he (Popper) insisted that these elements should be subjected to rigorous criticism and not immunised or protected as required by Lakatos (and Kuhn).

Caldwell then proceeded to "Popper on Situational Logic" and brings together some of the ideas that Popper spread about in different places (which Colin Simkin collected into a book on Popper and the Social Sciences). He noted that Popper's paper on the rationality principle is "almost perversely obscure" on some important points, especially what one is supposed to do with the rationality principle (the animating factor of the model of action) when it turns out that an action was not actually rational. [Boland had that covered in his book of 1982 where his Popper/Hayek model allowed for mistakes. It is not irrationality that accounts for an archer missing the bull’s-eye or a batter lobbing an easy catch to shortstop]. Boland's book appears in Caldwell's bibliography but I do not recall that it was cited in connection with Popper's situational analysis. Like Boland, Caldwell suggests that we might get over that problem by suggesting that agents act appropriately to the situation as they see it (thus allowing for defects in information, perception and interpretation). One might add that one should allow for their objectives as well, so their plans are included in the model of the situation.

"This type of 'subjective rationality' does little more than to posit purposeful, goal directed behavior." He notes the parallel with the Austrian postulate of purposeful behavior as the fundamental axiom of human action. After some hand-wringing, Caldwell decides that this type of postulate must be metaphysical, hence on the wrong (nonscience) side of the demarcation line. "Given this interpretation, to the extent that economics or other disciplines employed situational analysis, they would not be considered sciences".

So much the worse for unhelpful notions about demarcation, which was the von Mises reaction to the simple-minded representation of Popper’s demarcation criterion.

Critical rationalism

The situation improves as we move along to page 22 of the paper and encounter the Metaphysical Epilogue. This happens under the heading "Popper on Critical Rationalism" which probably signals Popper's emancipation from falsificationism. This part of the paper is really good, like the account of situational analysis. It should have provided a platform for a change in direction by people like Blaug and Hands. Maybe it did in small ways. But it has to be said that Boland was there in 1982, not only with Popper as a critical rationalists but also with the Popper/Hayek model of analysis of economic decision-making. It is most unfortunate that Popper's developed thoughts on the role of metaphysics and metaphysical research programs only appeared in 1982 in a book on Quantum Physics, three decades after he formulated them. In the meantime the idea of programs spread in an unhelpful form through the work of Lakatos.

Blaug bids for Austrian citizenship

On the topic of Austrians and policy prescriptions, I refer to Blaug's Afterword on the collected papers from the second Greek Island excursion. Blaug has been a longstanding and harsh critic of the Austrian method of approach (in contrast to Caldwell who demonstrated exemplary tolerance and fairness in his treatment of the Austrians in his book). Here (p 501) Blaug reported that he had been a classical liberal for his adult life, so he should have liked the Austrian policies. Then on page 508, noting the Austrian contempt for Walrasian multimarket equilibrium, he wrote "I have come slowly and extremely reluctantly to the view that they [the Austrians] are right and that we have all been wrong.... etc". Next he will admit that he was wrong on Popper as well! I look forward to reading a properly revised edition of his classic (Boland previously offered him some advice on the revised edition but I suspect he did not take it).